What will Thinkstock Mean for iStockphoto?

There is a lot of concern among iStockphoto contributors as to whether Getty Images’ new Thinkstock venture will benefit them or result in reduced revenue overall as sales on the main iStockphoto site decline. This particularly worries exclusive photographers. Calculating the potential loss is very complex, but photographers must hope that none of iStock’s volume customers turn to Thinkstock and that a large percentage of Shutterstock customers will start rushing to Thinkstock. To be successful, Getty must capture more revenue from Shutterstock customers than they lose as a result of customers leaving iStockphoto and Getty Images to buy subscriptions.

It would seem logical that iStock customers who are volume buyers would at least check out Thinkstock before searching iStock. The collection is being promoted as having images from the “industry’s leading content providers: Getty Images, iStockphoto and Jupiterimages,” as well as being “unmatched in its quality and variety, and provid[ing] all file sizes regardless of the subscription package.”

Getty will certainly heavily promote Thinkstock to all of its iStock customers. While the company is more interested in reaching the customers of Shutterstock, Dreamstime and Fotolia, Getty certainly will not ignore its own list.

iStockphoto may have better and more up-to-date images than Thinkstock, but that fact may get lost in the promotion. With the exception of the images coming from iStock, most of the 3.5 million royalty-free images in the collection comes from more than 60 Getty wholly owned brands. Very little new imagery is being added to these collections. To a large extent, they are made up of images that are two, three or more years old. As a cost-cutting measure, Getty has dramatically reduced its wholly owned production operations to the point that they are almost non-existent. Thus, virtually all the new imagery will have to come from iStock photographers, and Getty has promised that tens of thousands of new images would be added each week.

In one sense, this can work to the advantage of iStock photographers, because their new images are likely to get more attention on Thinkstock than the older ones in the other brands. Nevertheless, it is worth considering what photographers will receive if their images are sold through Thinkstock compared to what they could receive if the image were purchased from iStock, particularly if the customers need larger file sizes for print use.

If the files are used for anything other than Web use, the photographer will have to make lots of Thinkstock sales to offset the loss of one iStockphoto sale.

Market saturation

The sales of Thinkstock and iStockphoto could be a major indicator as to whether

microstock has reached a level of market saturation. In an earlier story we pointed out that sales of the top iStock contributors seemed to be declining in 2009. If iStock photographers continue to experience a decline in units downloaded in 2010, and there is a revenue falloff as well because Thinkstock is cannibalizing iStock sales, that will be a strong indicator that it will be difficult to grow revenue via single-image microstock sales in the future. Microstock price increases will simply drive more customers to subscription.

It all happened before

It is also interesting to note that this is the same thing that happened to traditional royalty-free early in the last decade. Royalty-free sellers were producing higher volumes of better and better quality images and the number of potential customers wasn’t growing significantly. Consequently, in order to grow revenue the sellers increased prices. When that alone didn’t work they bought out competitors in order to increase market share. The average price of a royalty-free images got to about $240, rising from a period in the 1990s when you could buy a disc full of images (think subscription) for around $2.00 per image.

This was great for a while, but it opened the door for a lower-priced product. Microstock has also experienced tremendous growth in usage and price in the last four years or so going from an average price of $0.25 per download to probably between $6 and $8 now. There are some customers who will pay even higher prices, but how many customers will be lost when these current prices are deemed too high and customers start looking for an alternative?

That is what the Thinkstock subscription model is going to test. If the vast majority of iStock’s images are purchased by customers who use 3 images or less a month, then iStock’s sales are not likely to be affected in any major way. But the customers who need more will certainly learn to check out Thinkstock first to see if what is available fulfills their needs.

Up until recently, subscription services were really aimed at very high-volume customers. If the customer only needed a minimal number of images on an infrequent basis, a subscription was impractical. It made more sense to purchase single microstock images as needed. But with Shutterstock’s introduction last year of 5-image subscriptions for $49 and 25 images for $229, that all changed. Now small users can justify purchasing a subscription. Getty promised to announce prices for subscription packs of 5, 25, 100 and 250 images soon.

Comparative pricing

Another thing that seems likely to hurt the single-image market is SpiderPic, whose technology enables customers to compare prices. If SpiderPic adds Shutterstock and Thinkstock to the agencies they compare, even if they do not offer a comparative price, customers will know that if a selected image is for print purposes and if they can use at least 5 images then Shutterstock or Thinkstock will offer the best prices. Many of the best images on the microstock sites are also on Shutterstock and Thinkstock.

SpiderPic’s impact will depend entirely on how well it is publicized to the buying community. In nearly all cases, iStockphoto prices for single images based on file size are greater than the prices on any of the other microstock sites. Now it is easier to make that determination.